Powerball lottery creator patents new games

The co-creator of the Powerball lottery game has patented an international jackpot game and a new lotto game that could some day be played in the United States.

Edward Stanek is president of the Iowa Lottery and one of two men who came up with the Powerball game, which is now played in 27 states.

The Powerball game has generated about $17 billion in sales for lotteries nationwide over the past 14 years, but Edward Stanek has never cashed a dime in royalty checks.

Stanek chuckles when anybody asks him whether he has received any extra income for helping to create the popular Powerball game.

"The only thing I ever received is this walnut plaque," said Stanek, who keeps the award in his office in Des Moines. The Multi-State Lottery Association, which oversees Powerball in 27 states and two other jurisdictions, gave Stanek the plaque "in appreciation for work done on the development of the Powerball game."

Neither Stanek nor Steve Caputo, a former Oregon lottery official who helped to develop Powerball, ever patented the original game. Now Stanek is determined not to make the same mistake twice, although he said his concerns are to protect intellectual property rights rather than to obtain a personal financial reward.

United States patent records show Stanek was personally awarded a federal patent on May 3 for developing an international-type lotto jackpot game that allows for the accumulation of a "super prize pool." In addition, Stanek has a federal patent pending for a new generation of a lotto game under consideration by the Multi-State Lottery Association.

Although the new patent and the pending patent are both in Stanek's name, Stanek said any royalties or other financial benefits will become the property of Iowa Lottery or the Multi-State Lottery Association. The games were created largely on state government time, and Stanek said he won't ask for additional compensation.

"These are protections to make sure that somebody doesn't come in and clone these games and use them for their own benefit," Stanek said.

Mark Janis, a University of Iowa law professor who has written and lectured on patent issues, said it is typical for employees of large government organizations and businesses to be required as a condition of their employment to assign patent rights to their employer. The patent owner decides the terms of licensing, and how royalties are distributed, he said.

Stanek's name is on the new and pending patents because patent applications must be requested in the name of the inventor, even if a patent will be owned by a company or by a government agency, Janis said.

At Prairie Meadows Racetrack and Casino in Altoona, a dispute over ownership of a new racing bet developed by track announcer Ken Miller led to his firing last year. The track claimed that it owned the bet because Miller was an employee, while Miller wanted to market the bet and obtain a small royalty. The issue was settled out of court, Miller has since been rehired as a track commentator, and both parties will get a share of royalties.

Stanek said his concern about obtaining the lotto patents is based upon what happened after he and Caputo jointly developed Powerball in 1992.

Powerball wasn't patented in the United States or any other countries and the game was copied by an Australian lottery that uses the identical Powerball name. In addition, variations of Powerball are offered elsewhere in the United States and England. Powerball is played by drawing five white balls out of a drum of 53 balls and one red ball out of a second drum of 42 balls. The jackpot winner matches all six balls.

Stanek has headed the Iowa Lottery since it began in 1985, and he is the nation's senior chief lottery executive. After he decided against taking early retirement last year, he received an $81,000 pay raise, making his $207,000 annual salary one of the highest in Iowa government.

The fact that Stanek has never requested any royalties for his lottery inventions "shows the commitment that Ed Stanek has to the state of Iowa, and more specifically to the Iowa Lottery," said Tim Clausen, a Sioux City lawyer and Iowa Lottery Board member.

Iowa Senate Democratic Leader Michael Gronstal of Council Bluffs said the matter of whether a state employee should receive a royalty for an invention developed on state government time should probably be explored by state leaders.

"We ought to have a system that encourages state employees to be creative, but I think state government ought to get some benefit as well," Gronstal said.

At the University of Iowa and most other universities, there are policies to address patent activities, Janis said.

"In the unlikely event that I would invent something patentable, I would be obliged to assign rights in that to the university, and the policy explains how I would get some benefit," Janis said. "There is a very complicated formula that says if it is ever licensed, here is how the royalties would be divided up."

Stanek said the lotto game patented in May could be used internationally or domestically. His invention makes it possible to offer a lotto game in different time zones using different currencies, prices and prize structures.

There were plans being developed in recent years to establish a worldwide lottery encompassing 40 lotteries, but the idea was shelved amid international political tensions after the U.S. military intervention in Iraq in early 2003, said Stanek, who formerly was the head of an international lottery association.

Stanek also has a patent pending for what he describes as "the next generation of lotto game beyond Powerball." The game would allow a "barbelling" of prize structures, he said.

"This means it could create very large jackpots, but at the same time have very good odds of winning small prizes," he said. The game is under review by the Multi-State Lottery Association, and no decision has been made whether to proceed.

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Unusual looking man, Stanek. Unusually piercing eyes, a smile that ain't a smile, beginnings of a hair-implant job, slight discoloration under the eyes, a proud set of ears laid back flat against his head, and a collar that's just a shade tight around the neck.

I looked up the patents he applied for. The first is for what we know as "The Blue Game", as in the player picks only one number from the second pool, while the lottery picks two or more. That's the first patent. The second patent also includes the game aforementioned, plus an interesting pari-mutuel prize system. A reserve fund is taken out, and it's used to increase the the lower prize levels in a state or country that has sold a jackpot winner. For example, if Pennsylvania sells a jackpot winner, all the players in Pennsylvania also get larger prizes in the other prize levels.